North American Miners Sell Shares at Fastest Pace Since 2013

ldz2(0nexj)iha4bl}36qtk3_media_dl_1.png Bloomberg

Article content

(Bloomberg) — Mining companies are selling shares at the fastest clip in a decade, and investors looking for exposure to sharply higher gold prices and in-demand critical minerals can’t get enough.

Article content

With October nearly finished, mining and metals companies across North America have raised $2.9 billion across 185 deals – an accelerated pace that will mark the largest monthly volume for sales of new shares by public companies in the sector since November 2013, according to data compiled by Bloomberg.

Article content

Article content

Article content

Gold and silver companies account for a third of the number of October’s stock sales and, even as the precious metals prices have fallen in recent days, investment bankers say appetite for more deals has been consistently strong.

Article content

Article content

“I can’t even think of a deal that’s struggled for the last while,” said Daniel Nowlan, vice-chairman and managing director of equity capital markets, corporate and investment banking at National Bank Capital Markets. “Almost everything’s been oversubscribed – many deals have been upsized, so the market’s been very strong.”

Article content

While gold and silver miners have accounted for the largest number of deals, investor interest in critical minerals — driven in part by the US government’s willingness to invest in the space — and near-record copper prices have also fueled investor appetite, Nowlan said. He expects mining stock sales to persist “for a while,” even after gold and silver prices have declined since Oct. 21.

Article content

Bank of Montreal has been the most active adviser to mining companies selling shares in the last month, data compiled by Bloomberg show. Peter Miller, head of equity capital markets at the firm, is also expecting a busy November with more deals in the pipeline, even if the gold price has declined recently, he said. Metals prices don’t have to be “stratospheric” for more miners to come to market, Miller said, just “buoyant.” 

Article content

Article content

The activity in the market so far has been entirely dominated by a “plethora of junior miners” rather than a handful of large companies doing a few large deals each, Miller said.

Article content

NexGen Energy Ltd. raised C$400 million ($287.2 million) in a so-called bought deal in the month’s largest sale of new shares. The transaction came alongside an upsized A$600 million ($395.9 million) share sale in Sydney, where the Vancouver-headquartered uranium miner is traded, in addition to its Toronto and New York listings.

Article content

Denver-based gold and silver producer Hycroft Mining Holding Corp. had the biggest precious metals deal in the mining space last month, raising $171.4 million.

Article content

For long-time mining investors, the volume is a welcome sign that institutions have a large appetite for the shares.

Article content

“We haven’t seen that much capital come into the space in a long time,” said John Ciampaglia, chief executive officer and senior managing director at Sprott Asset Management LP. The pace has meant new deals nearly every day in the mining sector, which Ciampaglia said he believes is still historically under-invested. “I think that’s really bullish and a healthy signal and a vote of confidence from investors.”